Sunday, 29 June 2014

More often than not, the apologists of Amway India say that
Amway India is facing problems only in Andhra Pradesh but nowhere else in India.
The critics even go to the extent of blaming one police officer who they
claim to be holding a grudge against the company. It is proved wrong once
again. Last year, the Kerala police filed criminal cases against Amway
India arresting CEO and MD William Pinckney. Here is another instance to
prove the critics wrong. This is time it is in the national capital
New Delhi.

New
Delhi (ANI)Direct marketing firmAmwayIndiahas been facing some
tough times of late; and its troubles don't seem to be ending any time
soon. In the past year, the company and some of its key officials have
been charged with financial irregularities.

In
May last year, its chairman and CEO William S Pinckney and two
directors were arrested by Crime Branch officers for violating various provisions
of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

And
now, a Delhi resident has lodged a police complaint accusing
Amway India of being involved in a scam allegedly worth over Rs.2000
crores.

According
to the complainant, Kiran Pal, key officials of Amway India, including Pinckney
and Chief Marketing Officer Sundeep Shah, allegedly adopted restrictive
trade practices that resulted in misrepresentation, and the sale of
inferior quality health, beauty and nutritional products.

In
documents provided by Mr. Pal, he has claimed in his complaint that an Amway
Enterprises Limited distributor lured him with the prospect of becoming an
Independent Business Owner (IBO) and achieving complete financial
independence.

According
to the documents provided to the authorities, Pal has said his wife used one of
Amway's eyeliner products, and thereafter, had to undergo costly medical
treatment for burnt eye lids.

Based
on Pal's complaint, the Civil Lines police station has issued a notice to the
Amway India's offices in Sector 32, Gurgaon, seeking clarifications on the
method of its operations, and details of agencies, if any, that verify
Amway's products.

Amway
India has not given a response or a statement with regard to this complaint,
despite repeated attempts to contact them.

Sunday, 22 June 2014

The Kurnool District Court granted bail to CEO and MD of
Amway India Enterprises, Mr William S Pinckney, more than a week back. But Amway India officials so far have not come forward to secure his release on bail. What could be the reason?

The Amway India Enterprises’ counsels and the bosses of
Amway in the USA have been attempting to bring pressure on the Indian
Government to release Mr Pinckney unconditionally. The Amway officials appears to have felt that more time Mr Pinckney remains in jail, he could garner more sympathy. In order to increase the
pressure on the Government they are keeping Mr Pinckney in jail. It is entirely
the fault of the Amway authorities in making the CEO and MD of Amway India
languish in jail.

Secondly, the District Court set as one of the conditions
for bail that Mr Pinckney should surrender his passport to the court. The Amway
authorities could not digest this condition. They pleaded that Pinckney has
been living in the country for the last 16 years and he would not escape to
other countries. The court did not agree to the contention and stuck to its
position for the surrender of the passport.

In fact, the Nampalli Metropolitan Magistrate Court should
have demanded the surrender of passport seven years back when a criminal case
was filed against Amway India by the CID of AP. For reasons better known to the
then judicial officer, there was no such demand.

At least this time, the district court of Kurnool set the
condition. Once he surrenders the passport and fulfil the other conditions, he
would be set free. Then only he could obtain bail from other courts including
Warangal, Khammam, Hyderabad and other places.

Why Mr Pinckney is not willing to surrender his passport?

In the case, he is convicted and sentenced he might escape
to the USA or Australia to avoid jail term. That is why the judicial court is
demanding surrender of his passport.

That exactly is the point why the bigwigs of Amway from the
USA are spreading canards that Pinckney was illegally detained and harassed.

In fact, he was legally arrested for indulging in a criminal
activity and he could secure bail by fulfilling the conditions set by the
judicial authorities.

Meanwhile, the journalist friends in New Delhi told
Corporate Frauds Watch that Amway officials are seen moving in the lobbies of
Parliament trying to impress upon the newly-elected members of Parliament for
the release of Mr Pinckney.

Saturday, 21 June 2014

The Indian Enforcement Directorate authorities have found after
a thorough investigation that Amway India has illegally siphoned
out of the country Rs. 8,000 crore (Rs. 80 billion) to the USA. The Directorate
has issued a show cause notice to Amway India Enterprises to that effect.

“The multilevel marketing company Amway India has siphoned
out Rs. 8,000 crore from India illegally,” a top official of Enforcement
Directorate said.

He also said that the Enforcement Directorate has been
probing violations of Foreign Exchange Management Act (FEMA) indulged in by
Amway India.

“We have issued show cause notice to Amway after completing
the investigation. The violations regarding FEMA are being looking into for the
repatriation of Rs. 8,000 crore in the past ten years, said the ED source.

The Corporate Frauds Watch has been raising the issue with
the officials at various levels for the last several years that there were
violations and the Amway India has been illegally siphoning out large scale funds
from the country.

Amway India has been claiming that it is investing Rs. 500
crore for setting up a plant in Tamil Nadu. But the fact is that it has illegally
siphoned out the funds up to Rs. 8,000 crore and Rs. 500 crore is just peanuts.

In the name of multilevel marketing, the fraudulent company
has been milking the Indians. It is high time people realised the
fraudulent activities of Amway India. The Corporate Frauds Watch estimated that
Amway had siphoned out Rs 10,000 crore during the last 15 years of its
existence in the country. Now the cat is out of the bag and the Central
Government should take initiative to curb the illegal business activities of
the multilevel marketing company.

Friday, 20 June 2014

CEO and MD of Amway India Enterprises Mr William S Pinckney is still in jail. For reasons better known to the counsels of Amway India, they have not filed bail petitions in courts where the criminal cases were filed against the fraudulent company. In India, bail is rule and jail is an exception. It appears that Mr Pinckney is enjoying his jail time with all the facilities he could buy in Indian jails. In the meanwhile, the Amway India unleashed a huge propaganda blitzkrieg in the media including electronic and print all over the country stating that Mr Pinckney was illegally 'detained'. It appears they do not know the meaning of detention or they do not make the difference between detention and arrest. No judicial court in India will send anybody, let alone an American-Australian citizen, behind bars without prima facie evidence. The latest is the article published in The Economic Times of India by the US-based chiefs of Amway. What these bigwigs conveniently forget is that India is an independent and democratic country and it has an independent judiciary. Unless there is prima facie evidence, no court in India will take cognizance of a crime and send the accused to judicial custody. As per the existing law of the land, the business Amway India Enterprises is doing in the country is illegal. The Andhra Pradesh High Court in its judgement based on the affidavit filed by Amway India itself regarding the business model of Amway, stated, "Inducement for aggressive enrolment of new members to earn more
commission is inherent in the scheme – Scheme provides for sufficient
inducements for its members to chase for new members to make quick easy money – By promising payment of
commission on the business turned out by down-line members sponsored either
directly or indirectly by the up-line members constituting a contingency
relative to enrolment of members, first petitioner (promoter) is earning quick
/ easy money from its distributors apart from ensuring its distributors to earn
quick/easy money – The two ingredients are thus satisfied in the case of
promoter too –Held
that the scheme run by petitioners squarely attracts the definition of ‘Money
Circulation Scheme’ as provided in Section 2(c) of the Act.. " As is evident from the contentions
advanced on behalf of the petitioners as noted earlier, the petitioners have
taken the stand that there is no quick or easy money involved in the scheme and
that the money which the sponsor member gets does not depend on any event or
contingency relative or applicable to the enrollment of the members into the
scheme.But on a careful analysis of the
true nature of the scheme as explained above, it is quite apparent that one of
the components of the income earned by a sponsor member is the commission which
is calculated not only on the personal PV of the sponsor member, but also from
the PV earned by all the remaining 102 members falling within his group.There is, therefore, no gainsaying that a
substantial part of the income which the first sponsor member of the group gets
depends on the event or contingency relative or applicable to the enrollment of
members into the scheme.This conclusion
can be tested by a further analysis of the income figures given in the earlier
paragraph.Supposing the sponsor member
at the top does not introduce any member and if he merely sells the products
given to him, he gets an income of Rs.12,420/-.If he sponsors only six people and they in turn do not sponsor any
member, then he will get an additional income of Rs.23,760/-.If those six members whom he sponsored again
sponsor four members each, he will get a further income of Rs.1,14,480/- and if
the 24 members sponsor three members each, he will get a further sum of
Rs.6,83,300/-.Thus the money which the
member at the top of the line gets depends upon the members whom he enrolls or
the members enrolled by him enroll. (Para 28).

When the judgement is crystal clear that the company is making easy and quick money in the name of selling products, the American operators have been time and again stating that their business model is legal. The Amway may be running in several countries where there is no law banning illegal money circulation scheme. But in India, there is a law which prohibits illegal money circulation schemes.

Let us look at Section 2 (c) of PCMCS Act, 1978. "Section 2 (c) “money circulation scheme” means any scheme, by whatever name
called, for making of quick or easy money, or for the receipt of any money, or
valuable thing as the consideration for a promise to pay money, on any event or
contingency relative or applicable to the enrolment of members into the scheme,
whether or not such money or thing is derived from the entrance money of the
members of such scheme or periodical subscriptions:

The law clearly says 'for the receipt of any money, or valuable thing as the consideration for a promise to pay money". Here valuable thing is the product which Amway is offering to its members. There is no ambiguity in the law. The American businessmen are spreading canards time and again that the law is ambiguous.

The long article published in The Economic Times of India has conveniently skips the High Court judgement which pronounced the business model of Amway is illegal. They also do not mention that the Supreme Court of India also upheld the judgement of High Court after Amway India filed a special leave petition in the apex court.

Why there is a hue and cry when a criminal on a proven charge of running illegal money circulation scheme is arrested? There are asking for the release of Pinckney as if he was detained illegally. They could simply file a bail petition and walk out of the jail. But they are enacting a drama to gain sympathy.

If anybody wants to do business in any country, they have to respect the law of the land and do their business accordingly. If anyone acts against the law, he or she will be arrested and put behind bars.

Just go through this article published in the Economic Times of India to know how the American heads of Amway are distorting the facts in the criminal case.

Amway India's CEO Bill Pinckney was arrested on May 26 at Amway's headquarters in Gurgaon. At the time of this writing, he remains in police custody. This continued detention and harassment must end. Amway is a reputable company with 55 years of operating legally and ethically in more than 100 countries and territories worldwide. And while the newly elected Union government in New Delhi played no role in this police action, we ask their help with the immediate release of Bill so he can be quickly and safely return to his family. To continue with this investigative retention when we have fully cooperated with all investigations and requests from authorities in India - including Andhra Pradesh - is unnecessary and unreasonable. Whenever our business model has been questioned, we have shown up to provide answers. We have made every effort to be entirely transparent and forthcoming with authorities. If there is a problem, we want to fix it so we can continue to do business in India. The underlying issue at hand is the lack of clear direct selling regulations that distinguish legitimate businesses like Amway from dishonest ones. Additionally, provisions of the Prize Chits and Money Circulation Schemes (Banning) Act seem to be misapplied against Amway. An amendment to this Act - or even new legislation - is something we have been working toward for some time. Hopefully, these recent events call greater attention to the immediate need for fair and balanced direct selling legislative guidelines. Fortunately, the newly sworn in Modi government's probusiness agenda is actively working to create an environment that will welcome foreign direct investment. This makes us hopeful we will be able to collaborate with them to find solutions that work for everyone. With similar situations in other markets in the past, we have successfully worked alongside government officials to resolve issues and we feel confident we can do the same here. Since opening in 1998, we have seen firsthand the potential this market holds. Amway India has grown into one of the top 10 global markets for the company, selling more than 140 high quality products - most of which are manufactured in India. We employ close to 500 people and have more than 550,000 distributors across the country. Our philanthropic efforts in India have helped nearly 100,000 children including visually challenged students in in need of educational and vocational tools. Amway is not alone in seeing the opportunity in India. The World Federation of Direct Selling Associations brought industry CEOs to India earlier this year to learn about doing business here. They too saw this potential firsthand and left feeling excited about their prospects for the future. Events like this however, may cause them to rethink investing in the Indian market. Despite the challenges we currently face, we remain firmly committed to doing business in India. We will not abandon the hundreds of employees and hundreds of thousands of distributors who are working to build businesses for themselves and their families. In fact, we will continue to expand our investment in India in many ways. This includes a new USD $100 million state-of-the-art manufacturing facility in Tamil Nadu. Our goal is to help Indian citizens reach their potential through a business of their own. When we say we're committed to their success, we mean it. To be clear, our top priority is the immediate release of Bill. We will continue to answer any questions any person may have about our business. And we stand ready to work with India's new Union government to develop clearer direct selling legislative guidelines to ensure events like this never happen again. (The authors of this article are Amway Chairman Steve Van Andel and President Doug

Sunday, 8 June 2014

Superintendent of Police Dr K Raghuram Reddy said that the interrogation of the managing director
and CEO of Amway India Enterprises William Pinckney has betrayed the business
model of the fraudulent company which is nothing but an illegal money
circulation scheme in the name of selling products 'directly' to the consumers.

The SP said that the CEO has stated that there was payment
to the upline members proving beyond reasonable doubt that there was sponsoring
of members into the scheme. Section 2 C of Prize Chits and Money Circulation
Schemes (Banning)Act specifically prohibits sponsoring of members. Section 3
prohibits enrollment of members into the scheme, he added.

He said that William Pinckney has admitted during
interrogation that Amway India has paid Rs 620.59 crore for the year 2011-12 as
commission to the upline members in the chain link scheme of Amway. For the year
2012-13, Amway has paid Rs 621.86 crore as commission and for 2013-14 the
company has paid Rs 569.10 crore to the upline members in the chain scheme.

The managing director and CEO of Amway has also admitted
that Amway has received Rs 33.4 crore for 2010-11 through renewal of membership
fee, Rs 40.2 crore for 2011-12 and Rs 40 crore for 2012-13, the SP said. “The
AP High Court pointed out that the collection of renewal membership is nothing
but easy and quick money earned by Amway,” he added.

The total sale of products was Rs 1838 crore for 2010-11, Rs
2150 crore for 2011-12 and Rs 2191 crore for 2012-13, according to the
statement signed by the Amway MD.

Referring to the gross profit of Amway, Pinckney said that
Amway earned a gross profit of Rs 437.6 crore for 2011-12, Rs 478.8 crore for
2012-13 and Rs 304.7 crore for 2013-14.

Pinckney has also admitted that the annual advertisement
budget for Andhra Pradesh alone was Rs 2.3 crore for the current financial
year.

Saturday, 7 June 2014

It has been twelve days since managing director and CEO of
Amway India Enterprises William Scott Pinckney was taken into custody by
Kurnool police. Since then he has been spending his time hopping from jail to
jail in the two states of Telangana and Andhra Pradesh. It appears that it
would take some more weeks before he secures bail to get released from the jail.
There are multiple criminal cases filed against the accused on the charges of
indulging in illegal money circulation scheme in the name of selling products.

Any police officer who has a look at the Andhra Pradesh High
Court will never think twice to register the criminal case against Amway India.
The judgement is well-written and highlights the intelligence of the Indian
judges in analysing a racket designed by Amway to loot the gullible people all
over world.

Nowhere in the world were criminal cases filed against Amway. It surely is the efforts of an untiring IPS officer VC Sajjanar, who
unearthed the racket and brought the culprit to book.

Earlier, he unearthed the racket of Japan Life and Wonder
World racketeering. However, whenever he arrested the guilty, the accused used
to say that why the police are not taking action against Amway which is
following the same business model.

As soon as he assumed charge as the superintendent of police
of Economic Offences Wing, VC Sajjanar arrested the kingpins of Amway India and
booked criminal cases against the company and its director-members. The rest is
the history.

Ref: G.O.Ms.No.178 Home department, dated
15/9/2008 of State Govt. of A.P.

****

1. It is respectfully submitted that Amway
India Enterprises has been promoting illegal Money Circulation Scheme in the
guise of sale of products. The Division bench of Hon’ble High Court of A.P. (WP
20470 of 2006) also held that the scheme of Amway is nothing but illegal Money
Circulation Scheme banned under the provisions of Prize Chits and Money
Circulation Schemes (Banning) Act, 1978. The Hon’ble Supreme Court of India
(SLP 13414 of 2007) also upheld the judgement of the Hon’ble High Court of AP
in this regard.

2. It is further submitted that the State
Government of A.P. issued a G.O. cited in the above reference, restraining the
Amway India Enterprises from issuing advertisements in Print and Electronic
Media. Amway has been issuing advertisements in all the Print and Electronic
Media in utter disregard of the said G.O., though no action is being initiated
against Amway in this regard.

3. It is further submitted that the fraud,
cheating and siphoning of amounts to foreign countries committed by Amway is
above Rs.1000 Crore and the activities of Amway extended across the state.
Hence, it needs a special investigation by Special Investigating Team (SIT) to
curb the social menace of illegal Money Circulation Scheme promoted by Amway India
Enterprises.

4. Hence, I pray that the Hon’ble Officer
may be pleased to form a Special Investigating Team (SIT) headed by D.I.G. of Police
for thorough and effective investigation to curb the promotion of illegal Money
Circulation scheme by Amway India Enterprises.

Ref: G.O.Ms.No.178 Home department, dated
15/9/2008 of State Govt. of A.P.

****

1. It is respectfully submitted that Amway
India Enterprises has been promoting illegal Money Circulation Scheme in the
guise of sale of products. The Division bench of Hon’ble High Court of A.P. (WP
20470 of 2006) also held that the scheme of Amway is nothing but illegal Money
Circulation Scheme banned under the provisions of Prize Chits and Money
Circulation Schemes (Banning) Act, 1978. The Hon’ble Supreme Court of India
(SLP 13414 of 2007) also upheld the judgement of the Hon’ble High Court of AP
in this regard.

2. It is further submitted that the State
Government of A.P. issued a G.O. cited in the above reference, restraining the
Amway India Enterprises from issuing advertisements in Print and Electronic
Media. Amway has been issuing advertisements in all the Print and Electronic
Media in utter disregard of the said G.O., though no action is being initiated
against Amway in this regard.

3. It is further submitted that the fraud,
cheating and siphoning of amounts to foreign countries committed by Amway is
above Rs.1000 Crore and the activities of Amway extended across the state.
Hence, it needs a special investigation by Special Investigating Team (SIT) to
curb the social menace of illegal Money Circulation Scheme promoted by Amway
India Enterprises.

4. Hence, I pray that the Hon’ble Officer
may be pleased to form a Special Investigating Team (SIT) headed by D.I.G. of
Police for thorough and effective investigation to curb the promotion of
illegal Money Circulation scheme by Amway India Enterprises.

Wednesday, 4 June 2014

Indian Direct Selling Association (IDSA) has been demanding
amendments to the Prize Chits & Money Circulation Schemes (Banning) Act,
1978 to enable the members of IDSA to loot the people of India without any let
or hindrance.

What a shameless demand! If anybody wants to do business in
any country, they have to respect the laws of the land and follow them
scrupulously. But these IDSA members are demanding something else. They want to
circumvent the law of the land to continue their fraudulent business.

Practising High Court advocate Shaik Mastan Vali came down
heavily against the demand of the Indian Direct Selling Association to amend
the Prize Chits & Money Circulation Schemes (Banning) Act, 1978. “It is
really ridiculous and brazen on the part of the IDSA to put forward such
demand,” he said.

Referring to the Supreme Court judgment in Kuriachan Chacko
case, he said that the honourable Supreme Court upheld action against such con
companies under PCMCS Act and where was ambiguity in the enactment and necessity
for amendment of the same.

The next demand would be to do away with the Section 420 of
Indian Penal Code as the Amway India was also booked under the provisions of
that Section, he averred.

Earlier, IDSA demanded guidelines for undertaking direct
selling of the products of its member-companies. Later, when it was proved that
the guidelines prepared by the Kerala Government were not of much use for the
continuance of their fraudulent business, now they are demanding amendments to
the PCMCS Act and if possible they demand repeal of that enactment.

For the last three and half decades, it has been proved a
good weapon against the illegal money circulation schemes undertaken by the
fraudsters and tricksters.

IDSA claimed that the charges framed against the Amway India
are frivolous and are giving misleading impression about its business
activities.

What they conveniently try to sweep under the carpet is that
the Andhra Pradesh High Court has already delivered its judgment about the
business model of Amway stating it attracted the provisions of the PCMCS Act.
Later, the Supreme Court also upheld the judgment, the High Court advocate, who
filed a Writ of Mandamus on behalf of Corporate Frauds Watch in the AP High
Court demanding implementation of GO 178/2008 issued against Amway India
Enterprises in the past, pointed out.

Generally, victims seek investigation by agencies like CID
or CBI. But strangely, these companies are seeking investigation by such
agencies only to prolong period of investigation to continue their fraudulent
activities.

To drive the point home, Mastan Vali recalls the demand by
NMart to transfer investigation of the criminal case against the company to the
CID. The statistics shows that the average period the CID takes to complete
investigation into a criminal case is ten years whereas it is only six months
in a law and order police station. This reason is enough for the fraudsters to
put forward their demand to transfer the case to the CID or CBI where over
10,000 cases are pending investigation.